Informal Services in Asian Cities: Lessons for Urban Planning and Management from the Covid-19 Pandemic

By Asian Development Bank

While supporting the livelihoods of most of the developing world’s urban poor, the informal sector also deprives them of basic services and social protection. Rendered vulnerable to socioeconomic threats, people in the urban informal sector have suffered disproportionately during the coronavirus disease (COVID-19) pandemic and face a highly uncertain future. Informal Services in Asian Cities explores informality’s forms and constraints. It describes the pandemic’s effects on the informal sector and how leveraging informal services can enable urban resilience. Drawing on interdisciplinary research, the book illustrates the transformative potential of urban planning and governance that addresses informality. It also details measures that could boost the informal sector’s inclusive and sustainable growth potential.

• Language: English
• Publisher: Asian Development Bank
• Release date: Aug 1, 2022
• ISBN: 9789292697174

Book preview

1

Introduction: Urban Informality and the COVID-19 Pandemic

Ashok Das and Bambang Susantono

1.  Urban Informality

Urban informality is now increasingly recognized as a corollary of urbanization. Although it has been variously defined, a common understanding of informality is a lack of conformity to some degree with formal, such as legally established and recognized institutions, rules and regulations, and practices. The lives and livelihoods of millions in developing Asia and elsewhere in the Global South or developing economies, are deeply linked to the pervasive informal sector.¹ Among them are the urban poor who work in the informal economy and reside in informal settlements, such as squatter settlements and slums—informality’s most visible manifestation—and millions more depend on it directly or indirectly (Chen and Beard 2018). The term informal sector has a broad ambit, implying the

In 2002, the International Labour Organization (ILO) was arguably the first multilateral institution to lay out an integrated approach to appreciate informality with its Resolution and Conclusions on Decent Work and Informal Economy. ILO initiated the development of statistical measures to explain the informal sector and officially defined the informal economy as all economic activities by workers and economic units that are, de jure or de facto, not covered or insufficiently covered by formal arrangements. The informal economy was recognized as comprising small or undefined workplaces; unsafe and unhealthy working conditions; low levels of skills and productivity; low or irregular incomes; long working hours; and lack of access to information, markets, finance, training, and technology. Workers in the informal economy were mostly not recognized, registered, regulated, or subject to any form of labor laws or social protection. The lack of development, services, and institutions for promoting and regulating markets were seen as some root causes of informality. In 2015, ILO adopted the Transition from Informal to the Formal Economy Recommendation (R.204) to advance the attainment of decent work and economic growth, which is Goal 8 (SDG 8) of the Sustainable Development Goals (SDGs) under the United Nations 2030 Agenda for Sustainable Development.

In October 2016, the New Urban Agenda (NUA) of the United Nations, steered by UN-Habitat, recognized the growing inequality and multiple forms and dimensions of poverty evident in rising urban informality and poverty in both developed and developing countries (United Nations 2017). The NUA is committed to supporting and promoting equally shared opportunities and benefits that urbanization can offer to enable all urban dwellers—whether temporary or permanent, and whether living in formal or informal settlements—to lead decent, dignified, and rewarding lives toward attaining their full human potential. These aim to support the pursuit of SDGs, particularly SDG 11—to make cities and human settlements inclusive, safe, resilient, and sustainable—by providing a comprehensive framework to guide and track urbanization.

Brisk, urbanization-led economic growth in Asia in recent decades has caused unprecedented poverty reduction, but poverty has become more urban and urban inequality has risen. Most poor urban dwellers pursue precarious livelihoods in the informal sector. It is where the debilitating effects of urban inequality are the starkest, but it is also where the poor and the vulnerable become resilient (Cervero 2000; Gulyani and Talukdar 2010). In 2020, cascading exigencies caused by the coronavirus disease (COVID-19) pandemic revealed the urban informal sector’s expansiveness and pervasiveness and, in terms of health and otherwise, the vulnerabilities of the poor who depend on it like never before (Corburn et al. 2020; Vijayan 2020). This is why the time is apt for a book of this nature to deepen our understanding of the informal sector in Asia, and how the COVID-19 pandemic has impacted it. This book brings together rich insights on different aspects of urban informality, informal sector services, and the impacts thereon of COVID-19 by presenting the work of researchers at the Asian Development Bank (ADB), the Asian Development Bank Institute (ADBI), other multilateral institutions, as well as academics and independent researchers.

This introductory chapter is organized into five sections. The second section traces a quick epistemological trajectory of how, over the decades, developments in scholarship and practice have influenced how planning and policy making view and engage with the urban informal sector. The third section provides a snapshot of how the efforts of multilateral institutions have helped to illuminate the critical needs of and COVID-19’s impacts on the informal sector in Asian cities. The fourth section then presents a brief overview of the history and status of ADB’s involvement with urban informality. The fifth section delineates the book’s structure and organization and introduces the foci and content of each chapter.

2.  Seeing Informality Differently: Historical Trajectories, Epistemic Shifts, and Progressive Influences on Planning and Governance

The practical policy and planning need for earnestly investigating the informal sector is underscored by recent global development consensuses that reflect the accumulated wisdom of long-standing as well as emergent planning scholarship. In the last 15 years or so, much research has demonstrated the inaccuracy and futility of viewing the so-called formal and informal as binaries—legal versus illegal, regular versus irregular, poor versus privileged, desirable versus undesirable, and so forth (Roy and AlSayyad 2004; Banks, Lombard, and Mitlin 2020). For instance, rejecting all state intervention by unequivocally celebrating slums as enterprising (Turner and Fichter 1972; Turner 1977) or simplistically saying that, to resolve the issue of slums, all the state needs to do is unleash dead capital by granting squatters titles (de Soto 2000). Scholars have called for a new epistemology of planning that embraces informality; as a consequence of urbanization, it is inseparable from formality (Roy 2005).

The preponderance of narrow and dichotomous views about informality is exemplified by what was a long-standing debate on whether slums are spaces of hope or spaces of despair (Chambers 2005; Lloyd 1979). Moreover, the convenience of associating slums and poverty with illegality, vice, and crime also serves to uphold popular disdain for urban informality. Research has traced back the genealogy of prevalent, largely negative, societal notions, and policy attitudes toward informality in developing economies to the efforts of the late 19th and early 20th century urban reformers and chroniclers in Europe and the United States. The genealogy exposed untold destitution and deprivation in fast-industrializing cities of the era (such as Jacob Riis’s documentation and photographs of abject poverty and squalid conditions in New York City tenements). This has also fostered and deepened popular myths that slums are hotbeds and nurseries of crime, vice, and immorality (Nuissl and Heinrichs 2013; UN-Habitat 2003). In the post-World War II era, concepts such as Oscar Lewis’s culture of poverty theory (Lewis 1963)—which argued that sustained poverty generated cultural beliefs, values, attitudes, and practices that prevented people from escaping poverty even if structural barriers gave away—underplayed the debilitating power of structural factors and institutional forces, and propelled the notion of personal and collective responsibility (Small, Harding, and Lamont 2010). Lewis’s ideas stemmed from his research on poor communities in Mexico, Puerto Rico, and elsewhere, and, albeit controversial, they influenced strong policy action in the United States, which then likely influenced perceptions and policies pertaining to urban poverty and informality internationally.

The decades following World War II also saw the rise of post-colonial nation states, particularly in Asia and Africa. Emerging from the long shadow of colonialism, these young nation states lacked adequate institutional, human resources, and technical capacities to build systems and approaches to development and planning that are sensitive to the needs and peculiarities of their own societies. Uneven development within countries, limited economic opportunities largely concentrated in cities, and weak agriculture and other primary sector economic activities in rural areas saw urban populations rise rapidly, especially in primate cities, due to rural–urban migration (Chambers 2005). Until the 1990s, policy and planning responses to growing informality in terms of shelter, services, and livelihoods due to rapid urbanization in the post-colonial, developing states reflected an inadequate understanding of migration, slum formation, informal sector dynamics; a narrow application of property rights; and a lack of awareness of the multiple dimensions of poverty. The following paragraphs highlight how, over the decades, our understanding and treatment of informality has gradually progressed due to evolving research and/or pioneering planning practice innovations in areas such as migration, shelter and services provision, property rights, livelihoods, resilience thinking, and the enlargement of community participation with increasing collaborative planning and governance.

2.1  Migration and Informality

Given a paucity of extensive and interdisciplinary research on migration to cities, urban policy making and planning have long assumed flawed premises. Rural to urban migration is widely [mis]understood as a oneway and permanent process that is largely responsible for sustained urban poverty and growing urban informality. This view prevails because narrow economic explanations of rural to urban migration, such as the Todaro (1969) and Harris and Todaro (1970) models, have dominated policy thinking in the developing world. These models narrowly considered low wages in the agriculture sector as the primary driver of urban migration, which exacerbated conditions in urban labor markets. Although the empirical validity of these models has been widely questioned, their persistent influence continues to encourage government policies that seek to restrict internal migration; and, in fact, such misguided policies have sharply increased since the 1990s (Fox 2014). Renewed interest in migration research in recent decades has illuminated the diversity and complexity of migration dynamics (Schmidt-Kallert 2012; Tacoli 2003). Therefore, an entrenched urban–rural policy dichotomy ignores the dynamic, cyclical, and interdependent nature of rural–urban linkages (Tacoli, McGranahan, and Satterthwaite 2015); yet, to manage internal migration better, how government policies should intervene or for what objectives is hardly any clearer today (Lall, Selod, and Shalizi 2006). National and local policies continue to discriminate against migrants when providing essential services and welfare support.

The upshot of rapid urbanization across the developing world, mostly due to rural to urban migration, was the proliferation of slums and squatter settlements. This was also at a time when states lacked effective planning capacity and policies to address informality. Extensive demolitions and evictions comprised the dominant state response to slums prior to the 1970s (Sumka 1987).

The preponderance of a dichotomous view of legality, which treats the informal as illegal, encouraged slum demolition and squatter eviction in developing economies. Such practices became legitimized and commonplace, but they have hardly prevented the emergence of slums because, for those affected, the benefits of proximity and access outweigh the risk of eviction. Although such practices are waning, they are still in effect. This is because many policymakers, public officials, and planners fail to appreciate that slums, usually, are the consequence of multiple push factors—economic, social, political, and environmental—as well as the inadequacy of urban services and affordable housing supply.

2.2  Shelter, Basic Services, and Informality

Beginning in the 1960s, influential writings by anthropologists like William Mangin and architects like John F.C. Turner, both of whom had for years closely observed informal settlements in Peru and elsewhere in Latin America, shed valuable light on slum origins, growth, and life (Mangin 1967; Turner and Fichter 1972). Turner’s contributions were pivotal in advancing the idea of self-help as a housing policy alternative to improve the quality of life in indigent informal settlements, and in exhorting the global urbanization and shelter discourse to see informality’s constructive side. Turner’s philosophy of bottom-up, self-help housing was influenced by ideas expounded by urban thinkers such as Charles Abrams, Jacob Crane, Patrick Geddes, and Peter Kropotkin (Das 2020; Harris 1999; Harris 2003). Between 1960s and 1980s, Turner and others revealed how, with neither state support nor interference, squatters had incrementally improved their individual homes to sustain their livelihoods and cultures, thereby creating thriving communities with robust social networks (see, for instance, Perlman 1979). This fostered the notions of not displacing squatters to prevent their vital economic webs and social safety nets from fraying, and enabling the urban poor to build their own homes over time. Deep ethnographic research also started emerging from elsewhere—offering nuanced insights into the lives of people in informal urban settlements and their aspirations, trials and tribulations, social capital, and potential for collective action, as well as how urban development initiatives’ quick modernization of the city often harm the poor (for example, see Guinness 1986 and Jellinek 1991). Extensive research efforts in developing countries have underscored that in situ slum upgrading and even carefully designed sites-and-services projects should be prioritized within shelter policies because they embody the logics of self-help and incremental development (Gulyani 2016; King et al. 2017).

In the late 1960s, in preparing the city of Surabaya’s first masterplan, Johan Silas, a young architect who shared Turner’s views on self-help and community-driven development, proposed to preserve the city’s kampung (traditional, slum-like neighborhoods that were poor and pervasive across much of the city) instead of demolishing and redeveloping them (Das and King 2019; Silas 1984). This radical departure from the common Indonesian urban development approach was meant to protect people’s livelihoods and not upend their socioeconomic ties, and stoke a latent culture of collective self-help (Das 2020; Das and King 2019). Jakarta also initiated a similar project around the same time. These two projects saw the local governments deliver just physical infrastructure and services, such as roads, footpaths, water supply, drains, and community toilets. Nevertheless, these inputs by the state catalyzed gradual yet unprecedented investment by the people to upgrade their homes and habitats. This was feasible due to the flexibility derived from abandoning the rigid imposition of standardized land use regulations and building ordinances, and enabling community participation and autonomy at the neighborhood level. The long-sustained, citywide upgrading and preservation of kampung today makes Surabaya a rare city that offers its low-income residents affordable shelter and informal livelihood options even in central areas (Das and King 2019). The effectiveness of these pioneering in situ (at the original site) upgrading experiments encouraged the World Bank and other development agencies to fund several Kampung Improvement Programs (KIPs), whose countrywide implementation is estimated to have reduced Indonesia’s urban poverty by about three-quarters. (Das and King 2019; Silas 1984).

Until the late 1980s, sites-and-services was another dominant policy that relocated entire squatter settlements to serviced sites on the urban fringe, with roads, water supply, sewerage, electricity, and even homes with property titles (Mayo and Gross 1987). Overall, these complex and heavily subsidized projects struggled to recover costs (Mayo and Gross 1987), harmed livelihoods and social networks (UN-Habitat 2003), and promoted downward raiding, whereby wealthier households supplanted the original beneficiaries (Gilbert 1997). However, some projects did succeed in Africa and Latin America (Buckley and Kalarickal 2006). In South Asia, as growth over 2 decades expanded the city outwards, the once fringed project sites transformed into thriving communities (Gulyani 2016). Besides broadening the urban poor’s access to the housing market, successful sites-and-services projects created well-planned, well-serviced, livable, mixed income, and inclusive neighborhoods that developed incrementally. But sites-and-services projects were not predicated on community participation, something now deemed instrumental for more effective outcomes.

2.3  Property Rights, Tenure Security, and Informality

The rise of neoliberal policy thinking in the mid-1980s advocated rolling back the state from active development and service provision to allow for the growth of market actors. For example, the World Bank’s enabling markets to work agenda for housing sector and institutional reform in developing countries (World Bank 1993) caused a shift from supply-side to demand-side approaches (Pugh 1997), and pushed complex shelter policy reforms toward integrating land development, finance, and social and economic development (Buckley and Kalarickal 2005). Expectedly, the 1990s and early 2000s saw strong calls for extending private property rights to the urban poor (De Soto 1989; 2000), almost as a panacea to resolve the urban informality and poverty conundrum, and a growing emphasis on developing housing finance and alternative financing options for the poor (Ferguson 1999; Ferguson and Smets 2010). However, by exposing the fallibility of the minimal state in shelter delivery, research has also challenged the notion that private property rights, titling, and home ownership improve credit access (Goldfinch 2015) and tenure security (Payne, Durand-Lasserve, and Rakodi 2009). Increased access to formal housing finance and property rights also exacerbated spatial and socioeconomic segregation (Monkkonen 2012). Indeed, as globalization and neoliberalism deepened, labor and shelter informality spread and worsened (Kundu and Kundu 2010). The retrenchment of public expenditures and services, liberal flows of global capital, and relaxed development controls to boost investment in urban development have caused a marked uptick in megaprojects, displacements, and peri-urbanization (Shatkin 2016), and hindered pro-poor efforts by making employment more precarious, services scarcer, and housing dearer (Rolnik 2014).

The institution of neoliberal policies, at the global and national levels, and their limited success reflected a largely dichotomous view of property rights, and a lack of understanding of the mechanics of slum formation as well as the dynamics of informal markets that govern slum real estate. For too long, it was not even recognized that there are myriad types of informal settlements distinguished by different formation pathways and structural characteristics (UN-Habitat 2003), or that not all dwellings are owner-built and that thriving rental markets exist in slums (Kumar 1996). Policies aimed at extending tenure security to informal settlements continue to be governed by a narrow ownership versus rental dichotomy emblematic of western property rights regimes, while ignoring alternative and traditional, non-western tenurial arrangements. However, ample research now exists to demonstrate how tenure security in informal settlements exists along and evolves through a continuum (Payne 2001; 2002). Recent planning scholarship shows in granular detail how the form and function of informal real estate markets are shaped by legal systems governing property rights, by national and local policy, and by historical and geographic particularities of specific neighborhoods (Birch, Wachter, and Chattaraj 2016).

Scholars have decried the formal–informal dichotomy as false and unproductive because it is state policies and market forces that create informal settlements (Birch, Chattaraj, and Wachter 2016), which often provide the only affordable rental option for poor migrants (Naik 2019). Current planning wisdom holds that the most effective pro-poor shelter intervention is slum upgrading (King et al. 2017), which should allow communities and other stakeholders to participate, offer rights to land or tenure security, recognize the needs of renters, help sustain livelihoods, build social capital, and be citywide in scale (Das 2015; Imparato and Ruster 2003; UN-Habitat 2003).

2.4  Livelihoods and Informality

While much research and policy action has focused on informal settlements as providers of affordable shelter and essential services, relatively less attention has been paid to another invaluable service they provide—the opportunity for the urban poor to pursue a range of livelihood options that would otherwise be unavailable to them. In general, though not all, most people who reside in informal settlements also work in the large informal urban economy. Recent research efforts suggest that informal employment accounts for 46% to 86% of total employment in several cities of Africa, Asia, and Latin America (Chen and Beard 2018). Though their estimates and shares vary considerably across cities, regions, and countries, a major chunk of informal employment is in the form of self-employment in home-based enterprises (HBEs) and micro and small enterprises (Strassman 1987; Tipple 2005). HBEs are particularly important for women’s empowerment and advancing the gender objective of inclusive planning because for many women, these are often the only livelihood opportunities available. Civil society organizations (CSOs) around the world have long concentrated on empowering the working poor, especially women, in the informal economy to secure their livelihoods through various kinds of support such as for labor rights, tenure rights, and microfinance (Baruah 2010; Horn 2010). Among them are Women in Informal Employment: Globalizing and Organizing (WIEGO), a global network of regional member networks, organizations, and individuals, and Self-Employed Women’s Association (SEWA), a national trade union with several affiliate organizations. Their efforts have firmly placed the issue of informal livelihoods and women’s interests on research, policy, and planning agendas for urban poverty reduction at all scales (Chen, Roever, and Skinner 2016; Ezeadichie 2012; Rakodi and Lloyd-Jones 2002). The focus on informal sector livelihoods is gaining increasing policy attention because of its critical role in enabling urban resilience, a concept that is now atop urban planning and development agendas.

2.5  Resilience and Informality

Concerns over global warming and the increasing frequency of disasters and extreme weather events have triggered a burgeoning research interest in and policy and planning action for urban resilience. Influenced by resilience-thinking, whose interdisciplinary roots lie in the ecological and social sciences (Davoudi et al. 2012), creating resilient communities is a major planning objective causing a rethink of contemporary urban management (Cutter et al. 2008: 599). Increasingly severe and frequent recurring disasters, such as floods, in Asian cities (Chan et al. 2012) have laid bare how rapid urbanization, weak infrastructure, and iniquitous development exacerbate disaster impacts and render the poor and the informal sector disproportionately more vulnerable (Miller and Douglass 2016). Resilience-thinking has also nudged planners and policy makers to think of issues that have traditionally not been concerns of urban planning, such as food security (Raja et al. 2021).

Scholars have also long cautioned against these vulnerabilities that expanding cities now face, and pointed out how haphazard urbanization raises flood risks, which disproportionately affects the urban poor (Havlick 1986; Hollis 1975). The accumulation of research evidence suggests a new conceptualization to understand and enable community resilience (Cutter et al. 2008)—one that (i) distinguishes between inherent and adaptive resilience of a place, and (ii) emphasizes appreciating at once the interplay of multiple systems (human-environment, social, political) and dimensions (ecological, social, economic, institutional, infrastructure, community competence). To attain social resilience, which is now rightfully gaining attention, promoting cohesion, collective action, and state-civil society/community relationships for policy making and planning are indispensable. This, nevertheless, is challenging because, apart and together, the concepts of community and resilience underscore tensions between continuity and change, between resistance and adaptation, and between inclusion and exclusion (Mulligan et al. 2016).

2.6  Civil Society, Participatory Planning, and Capabilities

After the end of the Cold War, along with expanding market forces and information access, the spread of democracy and rise of civil society worldwide (Anheier, Glasius, and Kaldor 2001) stoked participation in planning, governance, and development in the Global South (Mansuri and Rao 2013). Emerging research that articulated the understanding of social capital and the benefits of leveraging it for development and poverty alleviation (for instance, see Mayer 2003; Rydin and Pennington 2000) also contributed to a significant growth in civil society participation in planning and governance in Asia (Cheema 2013; Cheema and Popovski 2010). The vast body of Nobel laureate Amartya Sen’s seminal scholarship on capabilities, exclusion, justice, and social choice has intricately exposed how marginalized groups are beset by unfreedoms that hinder the development of individuals, groups, and indeed entire societies (Sen 1999a; 1999b)—a concept fundamental to understanding and engaging with urban informality and poverty. Complementary contributions by other scholars such as Mahbub ul Haq (1995) and Martha Nussbaum (2000) helped push both discourse and practice of development and poverty beyond narrow income-based metrics toward appreciating complexity. The welcome upshot of their efforts is the creation and adoption of the Human Development Index (HDI) and the Multidimensional Poverty Index, and the emergence of progressive notions of inclusive urban governance (see for instance, Alkire et al. 2015 and Moser 1998). Likewise, the logics of collective action and co-production expounded by Elinor Ostrom and others have afforded the understanding to improve urban service delivery (Mitlin 2008). It is important and urgent to recognize that these seminal ideas and proven logics must be embodied in our approaches to dealing with informality.

Progressive planning theory concepts that have emerged in recent years in the west—such as multiculturalism (Sandercock 1998), the right to the city (Harvey 2008), the just city (Fainstein 2010), and spatial justice (Soja 2010)—have implicated neoliberal urban restructuring for eroding publicness and stoking exclusion. The context-sensitive adaptation of these concepts can be instrumental in reforming planning’s treatment of informality in developing economies. Yet, scholars have also called for decolonizing our ways of looking at the city by exploring distinct epistemologies that truly reflect urban transformations underway in the Global South—where urban institutions and complexities are distinct, and where planning, therefore, must include and not preclude informality (Robinson and Roy 2016; Roy 2005). Thus, in addition to progressive scholarship, the experiences and impacts of decentralization, globalization, democratization, and civil society expansion in developing economies have slowly but surely begun to change the state’s attitude toward informality. Multilateral and bilateral development institutions are also being more proactive and supportive in this regard.

Global consensus about making urban planning and development inclusive of informality and the informal sector (especially, shelter and work) has emerged in the form of the United Nations Sustainable Development Goals (SDGs) and the New Urban Agenda (NUA) (Dahiya and Das 2020; Fraser 2018). The NUA and SDGs (especially, SDG 11) explicitly behoove urban policies to acknowledge and remedy the marginalization of oppressed and disadvantaged groups in our cities (United Nations 2017; Watson 2016). The NUA recognizes that along with development policies, spatial organization, accessibility, and design of urban space can either promote or hinder social cohesion, equality, and inclusion. Squatters and others in the informal sector are among the most oppressed, but Asian cities still render them invisible, ineligible for welfare support, or even subject them to violence (Das 2017). Improved awareness about informality, the emergence of new stakeholders in urban local governance, and enhanced state–civil–society interactions, therefore, now present the informal sector as a site for critical analysis (Banks, Lombard, and Mitlin 2019). Recent empirical investigations on the informal sector in emerging and developing economies reveal that a large informal sector impedes economic recovery after crises. Lowering informality requires policies to improve human development, social safety nets, financing and markets, and institutions; and informality’s drivers and challenges are unique and require appropriately tailored approaches (Ohnsorge and Yu 2021).

While urban planning and management institutions largely ignore informality, some remarkable urban planning innovations for sustainable and inclusive development have emerged from the Global South, often motivated by the desire to ameliorate conditions for those in the informal sector and through their active involvement (Bhan, Srinivas, and Watson 2018; Corburn et al. 2020; Mahendra et al. 2021). Innovations that emerged in developing economies, such as microfinance from South Asia, participatory budgeting and bus rapid transit from Brazil, the Metrocable from Colombia, and instances of creative coproduction involving civil society actors in many countries have inspired similar attempts across the developing world and even spread to developed economies. Essentially, these innovations sought to overcome the marginalization of the informal sector and enable its integration into the urban mainstream. Likewise, scholars are recognizing that recent advances to engage with the informal sector in the Global South suggest that understanding the modes of informal urban development is also instructive for planning in advanced economies (Harris 2018).

For several decades, research on urban informality focused almost exclusively on developing economies, which likely encouraged the misplaced notion that it is not an issue of significance in the developed ones, which thereby does not deserve urban planning research and policy attention. However, the impressive scholarship on informality in developing economies—for its progressive planning ideas, eloquent frameworks, sophisticated arguments, and sheer volume—has inspired scholars in developed economies to draw policy attention to urban informality in rich-country cities (Mukhija and Loukaitou-Sideris 2014). Today, albeit at a modest scale, and often with the active involvement of civil society actors and community groups, creative modes of supporting urban informality are increasingly visible in the form of street vending, food trucks, pop-up or temporary urbanism, and tiny homes. Technological advancement is also proving to be a significant disruptor of the status quo, and urban informality is stimulating entrepreneurism and market-led innovation in unprecedented ways. Gojek, Indonesia’s first unicorn and platform economy giant, is rapidly transforming urban mobility and livelihoods;² it was inspired by informal sector motorcycle taxis. Many other service apps in the platform economy, especially finance and social networking ones, are rapidly transforming the urban economy by altering how businesses of varying degrees of informality operate.

New research based on micro- and macro-level data, including individual and household indicators, from many countries suggests that policies must address vulnerabilities of the informal sector. Transition to formalization is gradual and incremental, and pathways in and out of informality and poverty are complex (OECD and ILO 2019). Indeed, there is still much scope to explore and illuminate the variability and dynamics of the urban informal sector in Asia—its relationship to various aspects of urban development; how formal urban planning, policy making, and governance have engaged with informality; and what shifts are likely to ensue from the experiences with the COVID-19 pandemic. We hope that this book advances this mission.

3.  COVID-19, Development Institutions, and the Informal Sector in Asian Cities

The COVID-19 pandemic has had an unprecedentedly damaging effect on the economies of cities and countries around the world. It has impeded or even set back development efforts in developing economies. Yet, besides the pain caused by it, COVID-19 has also yielded a fortuitous upshot in developing regions and emerging markets by providing an important reality check. It has demonstrated the multiple, interconnected vulnerabilities of those who depend on the informal sector, stemming from a lack of access to shelter, services, and rights. The urban poor have not been rendered vulnerable by COVID-19; they were always vulnerable, and COVID-19 has just exposed their vulnerabilities much more. In particular, it has exposed the pervasiveness and precarity of informality across the Global South, including in Asian cities, where robust economic growth in recent decades might have had encouraged some complacency about the need to address informality directly and proactively. It has proven that merely relying on market forces to ameliorate informality, poverty, and inequality is insufficient, and underscored the need to strengthen public investment and engagement, create supportive policies, and enable coordinated and focused planning.

In discussing the impacts of the COVID-19 pandemic, recognizing a cruel irony is imperative. While the urban poor and those in the urban informal sector have suffered the worst, they were not responsible for the spread of COVID-19 (Bhan et al. 2020). Public health protocols to contain the spread of COVID-19 that were implemented briskly in the advanced economies (i.e., frequent handwashing, extensive use of sanitizers, and social distancing) are simply infeasible in most indigent informal settlements around the world. Slums are often characterized by unusually high densities and poor quality of water and sanitation services. Measures like strict lockdowns, paradoxically, do not just deal with the most severe economic blow on those in the informal sector but also deny them the opportunity to temporarily escape the epidemiologically risk-laden environs of their habitats (Khatua 2020). In the world’s largest urban slums, scores of thousands of people living in tiny dwellings within a square kilometer of land is commonplace (Lall 2020).

Since early 2020, when COVID-19 was globally recognized and treated as a global pandemic, multilateral and bilateral development agencies, the United Nations organizations, private sector research institutions, and national and international CSOs have all tracked and documented the extensive impacts on the informal sector. These ongoing efforts are yielding a critical mass of empirical evidence that behooves us to transform the prevailing insouciance or ambivalence toward urban informality. The International Labour Organization (ILO), for instance, has produced extensive data, surveys, and analyses of how the global pandemic has affected employment across the world. Globally, in 2020, an estimated additional 30 million adults fell into extreme poverty (living on less than $1.90 per day in purchasing power parity) while being out of paid work. The number of extreme working poor—those who do not earn enough to stay above the poverty line—rose by 8 million (ILO 2022). The absence of comprehensive social protection systems also has compounded financial burdens for the already poor and vulnerable households, with cascading effects on their health and nutrition. The Organisation for Economic Co-operation and Development (OECD), an intergovernmental organization of mostly rich countries, has stressed the need to eliminate the social vulnerability trap. Those who rotate frequently among precarious jobs are more vulnerable to all kinds of shocks, from individual- and household-level shocks to macroeconomic shocks due to global crises such as the COVID-19 pandemic (OECD 2020). Persistent high informality has hampered the consolidation of the middle class and a more inclusive labor market in Latin America. OECD (2020) is therefore calling for universal safety nets to protect the region’s informal workers, two-thirds of whom have no access to any form of social safety nets.

A recent monitoring report finds that by the end of 2021, employment had returned to pre-pandemic levels in most high-income countries,³ but labor markets in low- and middle-income countries, which were hit the hardest, have been recovering much slower (International Labour Office 2022). The report finds that informal sector workers have struggled the most. In the second quarter of 2020, informal jobs plunged by 20% or twice as much as formal jobs; informal wage employment still trails pre-crisis levels by 8%; women in the informal sector have fared disproportionately worse—women’s employment fell by 24% as compared to men’s 18%; and employment recovery for women has been slower than for men, thereby widening the global gender employment gap. By the end of 2021, more informal jobs had recovered than formal sector employment, increasing the former’s share of employment (International Labour Office 2022). While growth in informal employment is welcome, given the circumstances, it is also a cause for concern because of the associated precarity. Labor experts seem to believe that the pandemic might be inducing structural changes in the labor market—more informal self-employment, more remote work, and changing trends in temporary work—which can be enduring and damaging in terms of the quality of working conditions (ILO